In a case where Party A’s tax authority, who completed the registration of ownership transfer on the land in which Party B paid the purchase price, received a donation from Party B, and imposed gift tax on Party B, the case affirming the judgment below that the above disposition was unlawful on the ground that Party B’s unincorporated association, foundation, or other organization deemed a juristic person pursuant to Article 13(4) of the Framework Act on National Taxes may become a taxpayer of gift tax pursuant to Article 4(7) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003).

Article 4(6) of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 7010, Dec. 30, 2003); Article 4(7)2 of the Inheritance Tax and Gift Tax Act; Article 2 of the Addenda ( January 1, 2014)

J. C. S.P.E. (Law Firm LLC, Attorneys So-young et al., Counsel for the plaintiff-appellant)

Head of Namyang District Tax Office

Seoul High Court Decision 2011Nu29399 decided June 5, 2012

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Under the principle of no taxation without law, the legal provisions on taxes shall be interpreted in accordance with the text of the law, barring special circumstances, by denying the requirements for taxation or the requirements for non-taxation or the requirements for tax exemption, and it shall not be permitted to expand or analogicalize without reasonable grounds (see Supreme Court Decision 2000Du4378, Jul. 26, 2002, etc.).

According to the reasoning of the judgment below, the court below acknowledged facts as stated in its holding, and determined that an unincorporated association, foundation or other organization deemed a juristic person pursuant to Article 13 (4) of the Framework Act on National Taxes may be a taxpayer, but in the case of an unincorporated association, foundation or other organization deemed a juristic person, which is not a juristic person and thus subject to the above Act, Article 4 (6) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010) provides that "the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010)" shall be notified to donors, while Article 4 (6) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010) provides that an unincorporated association, foundation or other organization deemed a juristic person pursuant to Article 13 (7) of the former Framework Act on National Taxes (amended by Act No. 7010 of Dec. 30, 2003) provides that the disposition of this case is unlawful since it can not be imposed on the plaintiff.

In addition, such determination by the court below is just in light of the legal principles as seen earlier as to the interpretation of tax laws and regulations, and the newly established Article 4(7)2 of the Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014) newly established Article 4(7) of the Framework Act on National Taxes that stipulates that an unincorporated association, foundation, or other organization, other than an organization deemed a corporation under Article 13(4) of the Framework Act on National Taxes, shall be deemed a resident or non-resident and shall be subject to the above Act. However, in light of the fact that Article 2 of the Addenda of the Act provides that the disposition in this case shall be applied from the portion of donation received after the enforcement of the Act

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Shin (Presiding Justice)